In: Codes of Good Governance Around the World ISBN: 978-1-60741-141-3 Editor: Felix J. Lopez Iturriaga © 2009 Nova Science Publishers, Inc. Chapter 13 THE PORTUGUESE CORPORATE GOVERNANCE CODES AS A F ACTOR OF CHANGES IN RULES AND PRACTICES Carlos F. Alves◊ and Victor Mendes#* ◊ CEMPRE  , Faculty of Economics, University of Porto, Portugal # CMVM - Portuguese Securities Commission, Portugal ABSTRACT The first Portuguese corporate governance code was issued by the Portuguese Securities Commission (CMVM) in 1999. This code has been revised every two years. More recently, in 2006 the civil society issued a code of good governance as well. In this paper we argue that the issuance of codes of good governance in Portugal has been very important for two reasons. First, it has been leading the discussion on corporate governance matters. Second, it has induced the evolution of the governance system both by inspiring the enacting of rules and regulations, and by influencing the existing practices. We show that the level of the companies’ compliance with the good governance code has been increasing, which means that companies have been changing their practices. Furthermore, large and more liquid companies are more likely to comply with the recommendations. We conclude that the “one size fits all” model is not appropriate for the Portuguese case, and that the good governance code should account for size and liquidity. On the other hand, assuming that the best practice code is specially designed for large companies, it is expectable that smallest companies rely more intensively on the “explain” prerogative of the “comply or explain” principle than the biggest companies.  CEMPRE is supported by CFT through POCTI of the QCAIII, which is financed by FEDER and Portuguese funds. * The views stated in the paper are those of the author and not necessarily those of the Portuguese Securities Commission. ◊ Faculty of Economics, University of Porto, Portugal, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal. # CMVM - Portuguese Securities Commission, Portugal, Avenida da Liberdade, 252, 1056-801 Lisboa, Portugal.